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Defence review ‘flawed by drive to cut costs’

In a report published today, the National Audit Office (NAO) cast doubt on the Strategic Defence and Security Review and the decisions ministers took about the future of the Armed Forces.
A continuing crisis in the defence budget raises the prospects of more major cuts, the watchdog said. It also accused ministers of denying auditors access to Whitehall papers on key defence decisions.
Under last yearâ€™s review, ministers decided to go ahead with plans to spend Â£6.2â€‰billion on two new aircraft carriers, even though, according to the NAO, military chiefs would have preferred the money to have been spent on smaller warships.
The first carrier was due to enter service in 2020 but, to save money, the second was unlikely to sail and instead would be kept in a state of â€œextended readinessâ€. The review also immediately scrapped the Royal Navyâ€™s Harriers, leaving Britain without a working carrier.
The NAO criticised the entire defence review process, saying it was dictated by financial concerns because it ran in parallel with the Treasuryâ€™s Spending Review, which decided how much money the Ministry of Defence would receive.
The auditors said it meant that decisions were made that â€œhad to identify, cost and prioritise alternative capability options in an environment of considerable uncertaintyâ€.
â€œIn our view, this is not an ideal situation in which to have to take strategic decisions,â€ they concluded:
Their report also warned that even the single future carrier may yet prove to be unaffordable. The â€œcontinuing difficulties the department is facing in balancing its budget leaves carrier strike vulnerable to further changesâ€ as ministers try to manage the MoDâ€™s finances, the auditors said.
Adding to those concerns, the report concluded that ministers still did not know how much they would have to pay to enable the new carriers to carry conventional fighters rather than jump jets.
The MoD said its decisions would save Â£3.4 billion, but the NAO warned of major risks that the cost of the carriers could yet rise. The department still had an â€œincomplete understanding of the costs of the carrier decisionâ€, it said.
The NAO also warned that Britain faced â€œsignificant military risksâ€ in trying to regenerate the ability to operate a carrier from 2020.
Jim Murphy, the shadow defence secretary, said the report confirmed that the defence review was â€œled by the search for short-term cuts, not our nationâ€™s strategic defence needsâ€.
Margaret Hodge, the Labour chairman of the public accounts committee, said the carriers may fall victim to the â€œneed to balance the books in the short termâ€.
Liam Fox, the Defence Secretary, was â€œdisappointedâ€ in the way the NAO reached its conclusions and said the review was the best response to the â€œoverspentâ€ budget inherited from Labour.